Technology is changing the power industry, with advances in solar power and wind turbines helping to push the envelope on renewable energy. But those sources of energy are becoming more and more mainstream. If you want to be at the cutting edge, you need to look at companies like Covanta (CVA), Solazyme (TVIA), and FutureFuel (FF 3.87%).

More renewable power
Being Earth-friendly is increasingly important to consumers of energy in the United States. That makes it more important to regulators and utilities. It's why electric companies like Xcel Energy (XEL) make such big news over their renewable power efforts. In Xcel's case, the big talking point is harnessing wind.

Xcel serves eight Western and Midwestern states and has 3.4 million electricity customers and 1.9 million natural gas customers. The company's big environmental goal is to push wind power up to 22% of its energy generation by 2020; Wind made up just 5% of the pie in 2005. That should help drive a 30% reduction in carbon dioxide emissions over that span, too.

Of course old-line coal will still account for over 40% of Xcel's power in 2020, which is why it's also working on other ventures. For example, Minnesota regulators just gave the green light to 29 energy projects set to receive funding from Xcel's Renewable Development Fund. The list includes biomass and biofuel facilities. The money being spent isn't huge, but it points to the industry's emerging technologies.

Doing it today
Burning waste products like discarded corn husks is great, but there are other options. For example, Covanta operates 46 energy from waste facilities. Although the amount of electricity it produces is relatively small, at about 1,500 megawatts, it is blazing a path that merges what is an almost constant stream of human refuse with the vital need for power.

(Source: Greg Goebel, via Wikimedia Commons)

Don't underestimate the value Covanta offers, however. It may be small in the power space, but it processes 20 million tons of waste a year, about 5% of the U.S. trash stream. Moreover, it recycles 450,000 tons of metal a year. The company is literally making gold from garbage. It gets paid to haul the trash away, paid for the electricity it generates, and paid for its recycling efforts.

This Sam Zell backed venture is truly blazing a path along the leading edge of the energy industry. In fact, giant trash haulers like Waste Management and Republic Services may increasingly start to look like Covanta.

Bio, bio, bio
Another sector that's getting attention is biofuels. Here two big players are Solazyme and FutureFuel. Solazyme uses microalgae to produce oil from plant-based sugars, including sugarcane and corn, among others. Its customer list spans from food companies like Archer Daniels Midland to the U.S. Navy.

(Source: Vincecate, via Wikimedia Commons)

That said, Solazyme's work is still leading edge. It's losing money today, but hopes to be cash flow positive by the end of 2015. Note that the company isn't suggesting it will turn a profit in 2015. An impressive list of corporate partners that goes well beyond the two above, however, suggests that this high-tech company is worth a deeper look.

Further along on the profitability front is FutureFuel. The company makes specialty chemicals and bio-diesel. That's been a good mix for the company, helping to keep it profitable since it went public in mid-2006. On the bio-diesel front, it has enough capacity to produce nearly 60 million gallons of fuel a year out of such lovely leftovers as beef tallow and pork lard—Yum!

Here to stay
There's no question that solar and wind are key sources of power that will be increasingly important. However, technology isn't going to stop there. If you want to invest in the energy industry's cutting edge, look to companies like Covanta, Solazyme, and FutureFuel. They are making power and fuel in new ways, and using what some would view as waste to create value for society and their shareholders.